I speak and write about investor protection, money management, health economics, ecology and social issues. My latest book is "Keynes's Way to Wealth," a revealing look inside the successful portfolios of the world's most famous economist. All told, I've written 14 books including The Cul-de-Sac Syndrome and iMoney: Profitable ETF Strategies for Every Investor and write a column for Reuters.com. I speak across the U.S. and my writing also appears in the New York Times, Morningstar.com and other national publications. This blog delves into financial and social deceptions.

Top Three Tax Scams: How to Avoid Being Taken

In the 100-year history of the U.S. income tax, swindles have only become more sophisticated. The latest tax scams not only involve fleecing the U.S. Treasury, they may involve theft of identity information that is stolen from often unknowing victims. Here are some of the most prevalent frauds that the U.S. Internal Revenue Service has identified this year:

* Identity Theft or Phishing. Often this involves an innocuous-looking email that asks for personal id information like a Social Security number. Sometimes the swindlers want you to “verify” information through a website.

However you shake the snake, all requests for personal information through a third party you don’t know or can verify as legitimate should be avoided. Personal information is used to steal funds, open up credit card accounts and obtain phony tax refunds.

If you think your personal information has been stolen to process a fraudulent refund, contact the IRS immediately: Taxpayers can call the IRS Identity Protection Specialized Unit at 800-908-4490.

Logo of Internal Revenue Service, USA (Photo credit: Wikipedia)

* Fake IRS Agents/Phone Calls. If the IRS wants something from you, they will send letters that you can trace back to a regional office. They almost never call — unless you call them. Many of the fake IRS callers threaten arrest or seizure of assets. Some of the scams are quite sophisticated. Here’s a sampling:

Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.

Scammers may be able to recite the last four digits of a victim’s Social Security Number.

Scammers “spoof” or imitate the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.

Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.

Victims hear background noise of other calls being conducted to mimic a call site.

After threatening victims with jail time or a driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

In another variation, victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.

* Fake Preparers with Inflated Refunds. If you’ve been working with a tax planner/preparer and withholding payrolls taxes, the chances of receiving an outlandishly large tax refund is small. Yet many taxpayers are lured to storefront operations that claim to net large refunds. Here’s the modus operandi of these fly-by-nights:

“Scam artists use flyers, advertisements, phony store fronts and even word of mouth to throw out a wide net for victims. They may even spread the word through community groups or churches where trust is high. Scammers prey on people who do not have a filing requirement, such as low-income individuals or the elderly. They also prey on non-English speakers, who may or may not have a filing requirement.”

It’s easy to verify whether a call or letter is from the IRS: “If you know you owe taxes or you think you might owe taxes, call the IRS at 800-829-1040. The IRS employees at that line can help you with a payment issue – if there really is such an issue.”

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